Alaska’s only taker so far on oil-lease bids in Arctic refuge

After a three-year push by the Trump administration to open the Arctic National Wildlife Refuge in Alaska to oil drilling — an effort that culminated in a rush to sell leases before the White House changes hands — in the end the only taker stands to be the state of Alaska itself.

With the deadline today for submitting bids for 10-year leases on tracts covering more than 1 million acres of the refuge, there is little indication that oil companies are interested in buying the rights to drill under difficult conditions, to extract more costly fossil fuels for a world that increasingly is seeking to wean itself off them.

In the uncertainty, a stateowned economic development corporation voted last week to authorize bidding up to $20 million for some of the leases. “It’s an extraordinary opportunity,” Frank Murkowski, a former Alaska governor and senator, told the board of the corporation, the Alaska Industrial Development and Export Authority, at a meeting before the vote.

There are legal questions surrounding the action, including whether the development authority qualifies as a bidder. And environmental organizations, some Alaska Native groups and others are seeking an injunction in U.S. District Court to halt the lease sales outright, arguing that they are part of a deeply

flawed process by the Interior Department that, among other things, played down scientific findings about possible damage to the refuge.

But if the development authority proceeds, it sets up the possibility that when the sealed bids are opened on Jan. 6, the state may find itself the sole owner of leases. That would leave it to hope that, at some point over the next decade, interest in drilling in the refuge picks up and it can sublease tracts to someone else.

The sale outcome would also be a strange end to the Trump administration’s push to allow drilling in the refuge, which is thought to overlie billions of barrels of oil, although that thinking is largely based on decades-old data. President Donald Trump has said that opening the refuge to oil companies was among the most significant of his efforts to expand domestic oil production.

Roughly the size of South Carolina, the refuge is one of the last great expanses of virtually untouched land in the United States, home to wandering caribou, polar bears and migrating waterfowl. Alaskan officials and many Republican lawmakers have long sought to allow drilling there, citing the jobs and revenue it would create. But the refuge was protected for decades, largely by Democrats in Congress.

That changed in 2017 when Republicans, in control of both chambers of Congress, pushed through a tax bill allowing sales of leases of up to 1.5 million acres of the refuge along the coast. Following an environmental review, the Interior Department this summer approved a sale, plans for which were accelerated following Trump’s election defeat. President- elect Joe Biden is opposed to drilling in the refuge.

This month, the Bureau of Land Management, the Interior Department agency handling the sales, removed about a half- million acres from the bidding, citing concerns about disrupting caribou calving areas and disturbing other wildlife. That leaves about 1 million acres available across 22 tracts, with a minimum bid of $25 an acre.

With just a few days before the deadline, Lesli Ellis-Wouters, a spokeswoman in Alaska for the bureau, declined to say whether any bids had been received. “That information is considered confidential until bids are opened,” she said.

The Alaska Oil and Gas Association, a trade group, has long said that companies avoid tipping their hand about their plans.

Pavel Molchanov, an energy analyst with the financial services firm Raymond James, said companies were highly unlikely to bid, given the cost of exploring and drilling for oil in the Arctic, the potential damage to their reputations from operating on lands prized by environmentalists, the growing movement among major banks to refuse to finance drilling in the refuge, and the depressed state of the industry amid the coronavirus pandemic.

“Drilling in the refuge is just about the last thing that any oil companies want to do right now,” Molchanov said. “But even pre-covid, industry appetite for this would have been sparse.”

Should the court allow the lease sale to proceed, the incoming Biden administration is expected to seek to reject them. Questions about the legality of state ownership might offer another avenue for the new leadership to do so.